Mapungubwe Institute for Strategic Reflection (Mistra) on September 15 hosted its sixth annual platinum group metals (PGMs) roundtable, placing emphasis on the progress achieved thus far in developing hydrogen opportunities in South Africa.
Political strategist Joel Netshitenzhe, as the first speaker, noted how government had identified green hydrogen as the first among South Africa’s big frontiers of strategic investment.
“In this context, we need to ensure that we pursue a holistic approach with key elements that include the production of hydrogen and PGMs as raw materials for the global hydrogen economy, using hydrogen as an energy source within South Africa itself, manufacturing electrolysers for the production of green hydrogen, manufacturing fuel cells, as well as financial beneficiation in the form of a PGMs exchange.”
Netshitenzhe asserted that South Africa need not end up as a producer and exporter of raw materials only, with minimal manufacturing, and perpetuate the relationship of dependence on the import of finished products from other countries.
He said South Africa could become a leading actor with many first-mover advantages.
“We, therefore, welcome the initiation of the hydrogen mobility corridor by Sasol and Toyota, initiatives to develop aviation fuel, advances by mining companies on fuel cell trucks and the decisive entry of black-owned companies into fuel cell manufacturing.”
Netshitenzhe said that, given the strategic position that South Africa occupies as a country in the value chain of the global hydrogen economy – from mining the required raw materials to electrolysing manufacturing capacity – it has a responsibility to ensure global security of supply and, at a local level, build empowered companies that can become national strategic champions.
This implied, however, a variety of conditions being met, including a conducive environment for investment in mining, stakeholder relations where mining is located, for example, and proactive development of relevant skills across the hydrogen value chain.
“We can no longer postpone the question of whether we are doing enough to develop the necessary demand side elements within South Africa itself. What about initiatives to use fuel cells in State buildings? Transport fleets in State-owned enterprises? Micro-grids in rural areas? These are some of the issues that we need to address as we enter, in earnest, the phase of practical implementation.
“Many opportunities beckon, but are we prepared to seize them with both hands?,” Netshitenzhe put forward.
Mistra researcher Dr Nqobile Xaba said Mistra had already determined years earlier that, although there had been developments in the PGMs industry, there was limited collaboration and often strained communication between stakeholders.
To this end, Mistra had convened multiple actors to take stock of developments in the sector and to anticipate and assess emerging themes with the purpose of drawing attention to the need for PGMs beneficiation in South Africa.
The last roundtable hosted in 2020 addressed the Hydrogen Society Roadmap drafted by the Department of Science and Innovation (DSI), the need to build a social compact for the PGMs industry and how transparency was required from all stakeholders, while local fuel cell research was being spear-headed by Hydorgen South Africa (HySA) at the DSI.
Xaba expected this roadmap to provide an idea of the South African government’s approach to hydrogen, which would hopefully spark more conversations around developing the value chain.
The roadmap was expected to be published in the coming months.
THEORY OF CHANGE
DSI alternative energy director Cosmas Chiteme said South Africa was well positioned to participate in the hydrogen economy, not only as a raw material supplier, but also as a global player in the technology development space.
“Innovation, by its nature, takes time and I’m glad South Africa has stayed its course. This is thanks to support from other government departments and stakeholders such as Mistra,” he stated.
A hydrogen strategy was fist launched by the then Science and Technology Minister in 2008, which has since evolved into the development of prototypes for targeted niche applications, and continuous independent reviews of HySA’s work.
HySA in 2018 launched a fuel cell unit to power a rural school and started with commercial sales of catalysts and membrane electrode assemblies.
Subsequently, government announced its commitment to the development of a Green Hydrogen Commercialisation Strategy earlier this year.
Next, Chiteme said the DSI had started engaging with the international and local private sector to collaborate on hydrogen technology, and formalising certain relationship for companies to get involved in the HySA programme.
He mentioned that various South African policy documents touch on hydrogen development, including the Green Transport Strategy, the Green Hydrogen Commercialisation Strategy, the Hydrogen Society Roadmap, the Just Energy Transition Framework, the South African Renewable Energy Masterplan and the Hydrogen Research, Development and Innovation Strategy.
The Hydrogen Society Roadmap, in particular, Chiteme explained, sought the effective integration of hydrogen-related technologies in various sectors of the economy to foster inclusive growth and help reduce poverty and inequality.
He noted that the document contained information on the creation of an export market for South Africa, decarbonisation of intensive industries, decarbonisation of transport sectors, hydrogen generation, storage and distribution, financial frameworks and skills development.
Subcomponents of the roadmap included, for example, a research and development programme around using green hydrogen to make value-added products such as fertiliser and sulphuric acid, as well as diesel and methanol.
Moreover, Higher Education, Science and Innovation Minister Blade Nzimande on November 2, 2020, launched a training programme in support of the hydrogen economy.
Another project, the Hydrogen Valley, was aimed at transforming the Bushveld Complex and larger region around Mokalakweni, Johannesburg and Durban into a hydrogen valley.
The project would identify and leverage existing facilities to create hydrogen hubs and infrastructure for concrete projects.
Chimete said the DSI was undertaking technoeconomic analysis to assess the business case for potential projects, map their socioeconomic impact and define necessary policy action to create conditions for implementation.
The project aims to have 50 buses and 50 hydrogen-powered heavy-duty trucks in operation by 2025. Partners in this project include the South African National Energy Development Institute, PGMs miner Anglo American Platinum and energy companies Bambili Energy and Eagle Energy.
The DSI was also looking at the demonstration of flue gas conversion technologies at the incinerator and power plant levels to provide domestic demand for green hydrogen.
The DSI’s position is that the production of hydrogen is socially just and sensitive to the potential impacts on job losses.
Chiteme said the department had learned through working on various projects that a combination of private and public investments was necessary to ensure that products were taken to market and that there was a need for relevant advisory bodies to be established to align the work of different initiatives.
As a case in point of a successful business borne out of hydrogen, Bambili Energy’s Zanele Mbatha pointed out the company used South African intellectual property and South Africa-produced PGMs in its fuel cell systems.
The company is able to create bespoke energy solutions for customers to gain carbon credits and reduce carbon tax.
Bambili offers collection and recycling of its fuel cell systems, targeting the recycling of 90% of its systems at the end of their lives, which is typically 20 years.
The company deployed 15 fuel cell systems in South Africa in 2020.
Mbatha said cross-government relationships were critical: “In that ecosystem you get the most traction in the adoption of technology.”
JSE commodity manager Raphael Karuaihe said the stock exchange had been considering the establishment of a metals exchange in South Arica.
“As the JSE, we support the beneficiation of PGMs, deeming it critical for socioeconomic upliftment and economic growth.
“The success of establishing a metals exchange depends on securing a good balance between the market participants who are keen to take positions on the PGMs platform.”
The JSE has been engaging with potential market participants to gauge interest, typically including mining houses, offtakers, banks and speculators.
However, the challenges needing to be managed include the increase in recycled PGMs and products being brought back into the secondary market with increasing regularity.
“Even if we are to establish a local exchange, we are up against an over-the-counter market that is way bigger and well established.”
Other considerations are that producers may not be using derivatives markets for hedging and that there is currently a bullish supercycle for PGMs, which is not the ideal state to be in, where producers do not need to hedge.
The JSE expects to update the market on its decision in due course.